C.A. Says Insurer Had No Duty to Defend Record Label From Suit
by Lounge Singer ‘Richard Cheese’

By a MetNews
Staff Writer

A Torrance-based
recording label which had signed an artist to sing lounge-style covers of
popular songs was not entitled to a defense by its insurer to a lawsuit
alleging it wrongfully had sought out other singers to produce similar albums
which diluted the artist’s fan base and earning potential, the Court of Appeal
for this district has ruled

Div. One said
yesterday that not potential for coverage existed under Oglio Entertainment
Group’s policy from the Hartford Casualty Insurance Company for the lawsuit
filed by Mark Davis in 2006.

Davis, who
performs as “Richard Cheese,” has released 12 albums over the last 11 years,
and has two more—“Back in Black Tie” and “Let it Brie: A Tribute to The
Beatles”—slated to come out in 2012 and 2013, according to his website.

He claims to
have sold more than 175,000 CDs and to have had his songs featured in the 2004
horror-flick “Dawn of the Dead,” on NBC’s “Las Vegas” and “Passions,” as well
as “Last Call with Carson Daly.”

His first album,
Lounge Against the Machine, came out in 2000, after he had entered into a
three-year recording contract with Oglio.

The contract
provided that Oglio would own the copyrights to the recordings, and have the
rights to use Cheese’s name to advertise, market, and promote the album, which
included use of “www.richardcheese.com” as Oglio’s internet domain name to
promote the album.

Oglio also
received the option for two years after the execution of the recording
agreement and upon payment of a minimum advance of $15,000, to require Cheese
to record a second album.

In 2001, Oglio
attempted to exercise its option to have Cheese record a second album
containing lounge-style versions of songs originally performed by Ozzy
Osbourne, but for a reduced advance payment of $7,000. Oglio also sought to modify
the agreement to give it the right to a third album.

After Cheese
declined to accept these changes to the contract, Oglio allegedly threatened to
hire a different artist to record similar music, and in 2002, Oglio released
two albums—“Diary Of A Loungeman” by “‘Bud E. Luv,’” consisting of lounge
versions of Ozzy Osbourne songs, and “Sub-Urban” by “Jaymz Bee & The Deep
Lounge Coalition,” another lounge-style artist.

Oglio allegedly
marketed these albums, and Cheese’s first album, on the richardcheese.com
website, even after the expiration of Cheese’s recording contract.

Cheese
subsequently sued Oglio for breach of contract, violation of his right of
publicity, and intentional interference with prospective economic advantage. He
contended Oglio had recorded and released the competing albums with the intent
to injure his professional reputation and goodwill and to divert sales from his
future albums.

Oglio tendered
defense to Hartford, and Hartford disclaimed coverage. Oglio settled with
Cheese for $80,000 in Sept. 2006 and then sued Hartford, alleging breach of
contract and breach of the implied covenant of good faith and fair dealing.

Hartford filed a
demurrer to the first amended complaint, arguing that Cheese’s complaint did
not assert a covered “advertising injury,” defined by the policy as an injury
arising out of “[c]opying, in your ‘advertisement,’ a person’s or organizations
‘advertising idea’ or style of ‘advertisement.’ ”

Johnson noted
the complaint “does not allege that Oglio copied, in an advertisement,
Davis’s advertising idea or style of advertisement, but that Oglio
sought out artists to copy Davis’s product and later sold a
competing product, injuring Davis’s sales and the value of his
professional name.”

As pleaded,
Jonson concluded, the underlying complaint was “that Oglio copied Davis’s product,”
not that “Oglio used an advertisement that copied an advertisement or
advertising idea of [Cheese’s],” and thus did not allege facts constituting an
“advertising injury” which would generate a duty to defend under the Hartford
policy.